With each passing year, the number of patent lawsuits filed in the United States continues to rise. In 1990, only 1,200 patent lawsuits were filed in jurisdictions across the United States. By 2010, that number had more than doubled to 2,892.1 This meteoric rise in patent litigation is attributable in part to the ever increasing role intellectual property plays in today’s economy. Well established companies are increasingly turning to intellectual property, and particularly to
patents, as a way to secure their position in the marketplace. At the same time, start-up companies are relying more than ever on patents to secure sources of capital and to differentiate themselves and their products, hoping to achieve market success.
Patents are effective in this role largely due to the drastic economic consequences a patent lawsuit can have for a company accused of infringement. Those found infringing can be subjected to onerous damages, future royalty obligations, or prohibited from manufacturing their flagship products. Even the mere accusation of infringement can be fatal to a company unable to shoulder the steep costs of defending against those accusations.
The commercial dangers of patent litigation are augmented by the fact that patent plaintiffs have the ability to control when and, more importantly, where the litigation takes place. By taking advantage of unique flexibilities granted to them under the patent laws, plaintiffs have almost unlimited freedom to litigate in the forum of their choice. Using these freedoms, plaintiffs can choose a jurisdiction with unusually high win rates, plaintiff-friendly juries, advantageous local rules, or one that eschews summary judgment.
Although there are ways for patent defendants to try to avoid a plaintiff’s choice of forum, courts’ willingness to defer to the plaintiff’s choice, coupled with shifting views on venue transfer, are making these arguments increasingly ineffective. To avoid the possibility of litigation in an unfavorable forum, would-be defendants now resort to declaratory judgment as a way to turn the tables and take advantage of the plaintifffriendly venue rules themselves.
Read more...The St. Louis Bar Journal (PDF)